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How to Sell a Car to a Family Member

by Lynn Burbeck

Transferring ownership of a car to a family member is no different than selling a car to a stranger---with the exception that you may be selling the car at a highly reduced price. If you plan on "selling" the car for $1, for example, your plan of helping out a relative may be somewhat foiled if he gets stuck paying sales tax on the value of the car. Before selling a car to a family member, it is important to understand the laws in your state so that you can enter into an agreement that is legal and fair to both parties.

Determine a fair selling price for the car. If you are essentially giving the car away to a family member for a low price, discuss the transaction with the buyer and come to an agreed-upon price. Otherwise, get an estimate of the car's value by going to the Kelley Blue Book website to get an estimate based on the make, model, odometer reading and condition of the vehicle. This estimate can help you determine an appropriate selling price based on the car's value.

Contact the motor vehicle department in your state to determine if there is a procedure that needs to be followed for gifting vehicles or selling them well below value. Some states have a special form that needs to be filled out, while others require an affidavit on the title transfer that recognizes car transfers between family members. This gift form or affidavit is strictly for tax purposes.

Sign over the vehicle title to the new owner and fill out a bill of sale if required by your state. When filling out the title, make sure to record the odometer reading correctly. If the mileage is an estimate because the odometer is broken or has been tampered with, put an X before the estimate. The sale price of the vehicle also needs to be accurately recorded on the title.

Collect payment from the buyer and hand over the car keys and title to complete the car sale. Make sure to remove your license plates from the vehicle so that they can be turned in to the Department of Motor Vehicles or transferred to a new vehicle.

Tip

  • The car buyer will need to register the vehicle and have it properly insured prior to driving it. The rules for registering vehicles are state specific, so the buyer should contact the motor vehicle office in her state to determine how long she has to register the car and whether it needs to be re-inspected. Some states that require buyers to get their cars inspected waive the rule for buyers who purchased the car from a family member.

About the Author

Lynn Burbeck is a professional writer with over five years of experience writing for the Web. She has published numerous articles for print and online media including "Grit" Magazine. Burbeck holds a B.A. in journalism and political science.

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